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2017 (10) TMI 1211 - AT - Income TaxPenalty under section 271D - contravening provisions of section 269SS - proof of business exigency for taking cash loan - assessee-company has accepted a loan of ₹ 12 lakhs from Sri Chennupati Jaganmohan Rao, who is one of the Directors of the assessee-company - whether exceeding overdraft is definitely a compelling circumstances and reasonable cause for obtaining loan by cash? Held that:- It is a fact that overdraft facility of the assessee-company with SBI is exceeded and therefore, cheque issued by the company was dishonoured and then only, the Director of the company withdrew the cash from his personal account with Canara Bank and deposited the money in assessee’s account to complete with the day to day commitments as it is for the business expediency and also reasonable cause for the assessee to accept money in cash. We find that when the cheque issued by the assessee-company is dishonoured on the ground of exceeding the overdraft limits, it is a minimum necessity to carry out the activity of the assessee and therefore Sri Chennupati Jaganmohan Rao, who is one of the Directors of the company withdrew the cash from his personal account and deposited the same in the company’s account. Therefore, under those facts and circumstances of the case, loan taken from Sri Chennupati Jaganmohan Rao for the purpose of honour the commitments is a reasonable cause - Decided in favour of assessee.
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